Bias: Range-bound, with current levels just below the 90-day average and within the mid-range of the last three months.
Key drivers:
- Rate gap: The Monetary Authority of Singapore's recent shift toward an accommodative monetary policy contrasts with the Reserve Bank of Australia's signals for potential rate hikes, favoring AUD.
- Risk/commodities: The Australian dollar faces pressure from weaker-than-expected Chinese inflation, which raises concerns about demand for key Australian exports, notably iron ore.
- One macro factor: Upcoming Australian economic indicators, like the Consumer Price Index and Labour Force report, could significantly impact AUD performance in the near term.
Range: Expect the SGD/AUD to hold within its recent trading range, with potential for slight fluctuations but limited movement away from the current levels.
What could change it:
- Upside risk: Strong Australian economic data or a surprise announcement of rate hikes by the RBA could boost the AUD.
- Downside risk: Continued weakness in Chinese economic data may exert further pressure on the AUD, potentially pushing the SGD higher.
